The Forces Shaping High Tech

November 12, 2013

Satya Nadella, '97, sat down with dean Sunil Kumar to discuss the future of technology and share his career insights with students. Read his advice »

In his 21 years spent developing new businesses at Microsoft Corp., Satya Nadella, ’97, has watched countless trends sweep the technology industry. Until now, though, he’s never had to reckon with so many forces reshaping the playing field at once.

“This is the first time I see four major trends evolving simultaneously: mobile, cloud, big data, and social media,” Nadella told Booth students during a fireside chat with Sunil Kumar, dean and George Pratt Shultz Professor of Operations Management, on November 5 at Harper Center.

“Ten years from now, which one of these four trends will be the foundational change agent?” Nadella continued. “I think it will be data. It’s the biggest challenge for distributed computing [systems in which problems are assigned to a number of different computers] as well as the greatest opportunity for entrepreneurs.”

As executive vice president of the Cloud and Enterprise group, overseeing computing platforms, developer tools, and cloud services—a role he has held since July—Nadella is leading Microsoft’s responses to these shifts. Some technology analysts consider him a candidate to succeed Microsoft Chief Executive Steve Ballmer, who announced in August that he will retire within a year.

Microsoft in fall 2012 sponsored a study on big data in Booth’s Management Laboratory, and Nadella said he gained insights from the students into how Microsoft’s clients are managing and analyzing their vast streams of data.

“I went into it saying, ‘This is an hour of my time—what am I going to learn from it?’” Nadella told the audience. He was surprised to learn that Microsoft customers generally are not yet dealing with true “big data” problems, a discovery that could help Microsoft refine its products.

Based on the success of last year’s project, Microsoft is sponsoring the Management Lab again this fall. “That outside-the-building perspective is more and more useful,” Nadella said.

The executive has played a major role in Microsoft’s evolution. Before his recent promotion, Nadella was president of Microsoft’s $19 billion server and tools division. Previously, he served as senior vice president of R&D for Microsoft’s online services division, which includes the Bing search engine and the MSN portal.

As Microsoft and other tech companies have fought for dominance, their growth opportunities have fallen into three broad categories, Nadella explained. First, companies that create an innovative user interface—the way a user interacts with a computer—have been especially successful. Think Windows for Microsoft, he suggested, or Apple’s touch screen.

Second, companies have become increasingly efficient at using resources, squeezing more power out of a given unit of computer storage. “Now, of course, it’s about the cloud,” Nadella said. Cloud computing uses a network of remote servers on the internet to store and process data.

Third, Nadella said, tech leaders currently are betting on which new software applications will become most important to users of cloud services and mobile technologies such as smartphones, in the same way that Microsoft’s Office suite was transformative for PC users.

The challenge for huge companies such as Microsoft is to patiently nurture these types of products in their infancy. Nadella said he was reminded of this by Doug Burgum, the founder of Great Plains Software—now Microsoft Dynamics GP—who once complained, “Microsoft plants trees, then the next morning it uproots them and says, ‘Why are they not growing?’”

“You have to look at both leading metrics and lagging metrics to be able to define business success,” Nadella said. He credited his Booth education for teaching him to manage his division’s future performance as well as its current results.

The two Booth classes Nadella said he remembers best are Professor Emeritus Marvin Zonis’s leadership class and a course on entrepreneurial finance taught by Steven Neil Kaplan, Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance. Added Nadella: “I wish I could come back every two years for three months.”—Amy Merrick

• Find your “superpower.” As a Booth student, Nadella initially thought he might want to be an investment banker, but it wasn’t a match for his passions. He told students to ask themselves where they can apply their strengths to produce the greatest impact. “Play the long game,” he said, and worry less about securing the highest possible salary right out of business school.

• Embrace hard work. As a young Microsoft engineer, Nadella found himself complaining to a boss about having to be in the office on a Saturday. The boss replied, “That’s why we pay you the big bucks.” Though a cliché, the response reminded Nadella that he was no longer a student, but an employee accountable to his team. “At some level, it changed my attitude,” he said.

• Focus on tasks that only you can accomplish. For the rest, empower someone else to do it. “Time management, it turns out, is probably the greatest art you need to learn to be successful at anything,” Nadella said.

• Be accountable for setbacks. In the mid-1990s, Nadella helped develop Microsoft’s technology for interactive television. It was the hardest he ever worked, yet the project was a failure. After he recovered from the disappointment, Nadella reflected on what he learned from the experience and what he might do differently in the future.

• Don’t compare yourself to others. “The way I measure my life is, ‘Am I better than I was last year?’” Nadella said. “In the long run, it actually works out.”